Economists suggest June quarter gross domestic product figures may represent the high-water mark for the mining sector’s contribution to the Australian economy. They argue global economic weakness has begun to damage Australia’s real economy.

However, other analysts argue the impact of recent price falls will be limited, pointing to an expected recovery in commodity prices, ongoing long-term LNG projects, and a potential weakening of the currency that would boost other sectors.

Growth for the June quarter came in at 0.6 per cent, reflecting a period when the iron ore price was as high as $US149 a tonne. It has since fallen back to $US86.90.

HSBC chief economist Paul Bloxham noted that for the year to June, engineering and construction linked to the resources sector made up a substantial portion of GDP at 2.5 per cent of the 3.7 per cent overall economic growth figure.

Goldman Sachs chief economist Tim Toohey said the national income shock from falling commodity prices might already have started, and that the weight of policy adjustment would fall to the Reserve Bank. “At both the monetary and fiscal level, careful consideration must now be given to planning for the prospect of a sooner and larger income shock materialising," Mr Toohey told clients.

“The question for policymakers is, do they react to the sharp hit to nominal income implied by the recent fall in commodity prices or do they wait until after the mining investment peak has occurred?"

Mr Toohey said the RBA was likely to be preparing for significant easing in the first half of 2014 but that this could be pulled forward to the second half of 2013 if commodity prices did not rebound and a return to budget surplus looked difficult. He said the impact to national income could reverberate through company profits, employment, tax revenue and, finally, household income.

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Goldman Sachs believes the RBA will ease rates by 0.25 of a percentage point in November and that the $A will fall to US98¢ in six months.

Mr Bloxham and National Australia Bank chief economist Alan Oster are in the camp that argue commodity price falls do not spell disaster for the economy, but are likely to lead to a more even re-balancing of growth.

Nevertheless, Mr Bloxham expects GDP growth to moderate in the second half, to an annualised figure of around 2 per cent – almost half the 4.1 per cent annualised growth for the first six months.

“A lot of mining investment expenditure we expect to support GDP growth has already started and commodity prices won’t matter in the short run," Mr Bloxham said.

“But it means less income growth and we have already seen income growth slow because the terms of trade have peaked. Profits from miners will impact tax revenues and the government’s ability to get back to a surplus."

The offset would be RBA rate cuts, Mr Bloxham said, which was likely to see a pick-up in housing construction and other sectors.

RBS Equities chief economist Shane Lee agreed that the fall in commodity prices would be felt mainly through the impact to income, with implications for federal and state budgets.

“The labour market will be firm for the next couple of years as investment growth is not likely to peak until the end of 2014," he said, noting commodity prices would likely have improved in line with better Chinese and US growth by that time.